In late 2011, Sony launched a new handheld platform called PlayStation Vita, the successor to its PSP. PSP was the machine that was supposed to cement Sony's dominance in the gaming world: When Sony launched it in 2004, it owned the home console business, and conventional wisdom said that this move into portable gaming would rip that audience away from Nintendo just as PlayStation had beaten it in the home.

What actually happened was that PSP stumbled at retail, getting steamrolled by Nintendo DS and becoming the ecosystem where software went to die. Things miraculously picked up in Japan off the success of Monster Hunter, but it was far too little and far too late. When Sony launched Vita a little over a year ago, it doubled down on the same strategy of amazing graphics and almost-console-like software.

But instead of improving on PSP's performance, Vita's first year has been much worse. Sony may have just announced that acclaimed indie game Hotline Miami (one of Wired's top games of 2012) is headed to Vita, but it's a lonely bright spot in an otherwise desolate situation.Sales Are Way Below Expectations

The first and most obvious problem that's facing Sony right now is the simple fact that the console itself just isn't selling. You can blame smartphones or the still-warming recession, but the fact is that Sony is set to fall far, far short of its initial projections.

Not long after the console launched in North America, Sony projected about 10 million worldwide sales for the PlayStation Vita by March 2013. We don't have access to exact figures, but it's very obvious that they aren't close to that number.

We do know the handheld sold just 2.2 million units worldwide by July 2012, five months after the worldwide release. In the six months since, Vita has had its worst sales yet, and seems to have added only a few hundred thousand sales during the holiday shopping season. To top it all off, it is often outsold week on week by its 7-year-old predecessor PSP - roughly the equivalent of the iPhone 5 getting outsold by the iPod Mini.Massive Price Drops

This week, Sony finally slashed the price of Vita - by a lot. So far this is only for Japan, but it reduced the price of the 3G-enabled high-end Vita all the way from 30,000 yen to 20,000 yen, a difference of roughly $100. The Wi-Fi-only model was dropped from 25,000 yen to the same 20,000 yen price point. (We expect they're clearing out the 3G model - does anyone really need 3G on their Vita?) At this price, Vita is still more expensive than the most expensive model of 3DS. We expect a similar price drop for the U.S., probably at tomorrow's PlayStation Meeting.The Games Are Non-Existent

Looking ahead to 2013, the current U.S. release list features precisely three games which will be exclusive to the system. Most of Vita's games will be launching simultaneously on the PS3 as well. The three games that are coming out are pretty interesting: Tearaway, Soul Sacrifice, and Killzone Mercenary all look like high-quality titles, but gamers can smell a weak platform.

There will likely be more announced tomorrow and later in the year, but this is a crucial time when Sony needs to be building excitement rather than letting it wither. In the online presentation that Sony's Japanese branch gave to announce the Vita's price drop, it didn't announce any exciting new software. The biggest announcement was that Square Enix is still working on the Vita remake of Final Fantasy X that it announced in 2011. Hooray.

Game consoles are a long-term investment, and customers get wary when the sales start dropping and the release list gets thin. It creates worry that the console won't be widely supported in the future. Unfortunately for Sony, this has become a chicken/egg conundrum. They need higher sales to convince developers to create games for the platform, but they can't stimulate sales without those games.

3DS Is Also Weak

Oddly, Vita's sales woes might be more understandable if Sony was getting crushed by its biggest direct competition, Nintendo. Yes, the 3DS handheld is beating Vita in sales by a wide margin, but 3DS is underperforming as well, especially outside Japan.

If 3DS was booming, that would at least indicate that there was a highly engaged set of consumers for Vita to potentially woo in the future. The massive success of the original DS in Japan made portable gaming a much bigger deal, and this was followed by increased PSP sales. Right now, however, it looks like widespread apathy toward the idea of an expensive, specialized gaming handheld.

Neither console has been able to make a compelling case for why the average gamer should go back to paying high prices for premium consoles when so many of us have smartphones in our pocket already.Sony Is Just Repeating PSP's Mistakes

After two bites at the apple, Sony may have to admit that gamers simply aren't drawn in by the idea of almost-console-quality games in their pockets. The terrible battery life and bulky size make such devices pointless to take on the go, and you end up with a slightly dumbed-down version of a console game on a tiny screen that you play in your house while your actual console sits there just in view.

Most hardcore gamers would rather play a higher-quality console experience on the big screen, and most casual gamers would rather pay a small price for a bite-sized game on their phone. This puts Vita into the same no man's land that PSP occupied.Sony Has Lost Key Partnerships

PSP had a few hits that helped fuel the system's prosperity in Japan. Brand new entries in the Monster Hunter, Final Fantasy, and Kingdom Hearts series were all extremely popular with Japanese gamers during the PSP's run. Fast forward to today, over one year later, and not one of them has been announced for Vita.

What could be worse? All three series moved to Nintendo's 3DS. In other words, Sony's strongest allies have abandoned ship.Sony's First-Party Games Are Weak

Sony's fans won't want to hear this, but the gaming public is getting less and less interested in its in-house games. Most of its best exclusives are based on genres (platforming, hack-n-slash) that have long since gone out of favor. Sorry Sony, but Mario is the only guy who can make a living platforming these days.

Sony does have a few series in popular genres, but Killzone and Resistance aren't exactly retail superstars. The Uncharted series did reasonably well in its debut Vita release, Golden Abyss, but it obviously hasn't spurred significant sales. One game alone won't convince gamers to buy a new console.

That leaves Sony's biggest series, God of War, which hasn't yet been announced for Vita. We'd love to see it announced at tomorrow's presentation, because Vita can't wait until E3 for a savior.Can Vita Recover?

Can an increased focus on indie games like Hotline Miami and a lower price help Vita find its footing? PSP did get things turned around (somewhat) (in one region of the world), so it's possible Vita could too. But as of now, there doesn't seem to be a clear pathway out of this pit of despair.

My coworker just linked me too this article and I honestly couldn't even read it all.

Yes, the Vita isn't selling well at all and Sony sure as hell hasn't marketed it enough or pushed third party developers to develop for it but I don't think the system is a failure just yet. The system is fairly new still so if Sony gets their act together and fixes a couple of key features(system price, memory price, more games) then they should be able to turn sales around.

The 3DS was a diaster. Nintendo fixed the problem, mostly. Sony has yet to do the same. Even still the 3DS outside Japan is tracking far less than the DS. Dedicated gaming devices in the long term might be in trouble.

Well there is that. The Dreamcast was a massive 'failure' but I still loved it and easily got my money's worth. So I question why gamers care that much in the first place. Poor sales are not, the Dreamcast was stellar.

The Vita really does not offer much that I cannot already get on my PSP. I would very much like to play my PS1 Classics on the larger, prettier Vita screen, but $250 is too much for the privilege. I want to play Uncharted and Persona, but I can wait for the price to drop considerably.

1. No used games!?!2. Lair...3. PS4/Xbox 720 suxors4. Because you touch yourself at night5. d00m3d!!!11!!6. Bitter, Flores and uncledonnie7. We have nothing better to talk about than why fairly new systems are already dead...

"Is it they're in trouble or is it that we just don't have the mix of hardware price/software selection that drives sales?"

I think we are in a transition period. I personally believe there are two distinct gaming demographics. Casual and hardcore. Over the last 2-3 generations both demographics had to buy the same gaming device. Back in the ps2/GC/xbox age there weren't casual options like tablets/phones. That just isn't true anymore today, thanks to Android/iOS there are other options. I think there is two obviously separate markets, which have many leaving the hardcore for the casual market, since they now have other options that weren't there before. Having said that the hardcore market isn't in trouble per say, given it is strong enough to survive. IMHO, this explains why the "videogame" market is shrinking, because it is being divided. I do believe we will not see another Wii/ps1/ps2 type success moving forward. I just don't see the core market growing. It will level off and maintain a market share once the drop is complete, and it won't grow back, IMHO. Nintendo is in the hardest section, because they don't know which market to go after. The U is half hardcore and half casual, Nintendo should have went one way or the other. Instead of attempting to please both. I know people aren't going to like my post, because the core crowd doesn't want to accept their market is shrinking, but facts are facts. I can use my wife an a perfect example, along with her sister. They both had a SNES growing up and got a Dreamcast when in high school but now don't own a console but game via tablets/phones. They were both always casual but bought a dedicated console due to lack of options.

Edit:On a side note the core industry really needs to figure out the definition of "failure." Not setting sales records and not being number 1 isn't a failure. "Failure" means not turning a profit.

I'm one of the people who bought the Vita when it was released last year and overall it isn't a bad portable system it's just one that hasn't really been as spectacular as the PSP. I mean I got the PSP 3000 and have about twenty games for it already compared to the Vita with its four, and while price for the games is a factor it's also that not too many Vita games have excited many gaming fans.

With the exception of these four games I've hardly really played the PS Vita as opposed to just my usual game consoles or PSP/3DS